In this interview with Aviation Correspondents, Managing Director of Arik Air, Chris Ndulue said to end disagreements between the Federal Airports Authority of Nigeria and airlines, the agency must have simple and transparent billing system. Chinedu Eze was there and brings the excerpts:
Disruption of flight operations
A lot of our travelling guests (passengers) were stranded at the airport yesterday (April 20). I want to use this opportunity to actually extend our apologies and the heartfelt consideration of the management of Arik Air, we want to apologise for that disruption and for any problem or inconveniences that you might have encountered yesterday.
Please accept our apologies, we have resumed normal operation since today (April 21) both domestic and international operations and we will continue to provide you with what you are used to, which is the very safe and reliable air transportation in Nigeria and all over our network. And going forward, what happened yesterday was very unfortunate and most unexpected because we only woke up in the morning when we started getting calls from our airport managers that FAAN workers did not allow them to enter the terminal. And this is quite unusual, we began to ask what was happening and it was then we learnt that that FAAN alleged that we owed it billions of Naira which it pegged at N11 or N12 billion.
So eventually we got to the airport, had a protracted discussion with FAAN officials who then turned out to be union leaders.
We could not lay hands on FAAN management. Calls that I personally made and some of my colleagues made to top management of FAAN were not answered, text messages were not responded to up till this moment. But be that as it may, we had this protracted meeting with FAAN staff or staff union, the police, especially the deputy commissioner of police at the airport was present at that meeting; the director of SSS (State Security Service) was present at meeting. And we finished that meeting and agreed to go back and reconcile if there were any issue or any outstanding payments that we will be able to make that payment as soon as we can finish dealing with that. So that is exactly what happened.
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I have read some of your reports and we wish to confirm that we were not informed before the action of the unions or FAAN staff. They took us by surprise, we never got any hint at all, if we did we would have sent text messages to our passengers, it is not our intension to put our passengers under stress.
I now address this session. We have brought in our legal counsel from Babajide Koku Chambers, a Senior Advocate of Nigeria (SAN) and the reason is that we were taken to court by FAAN and we have been trying to resolve this issue. Let me just go back to the history, I am sure some of you are aware of it. I think two years ago the Ministry of Aviation or FAAN took us to the Senate Committee on Aviation where we talked about this reconciliation and we submitted to ourselves to reconciliation and it was headed by Senator Hope Uzodinma.
Accounts reconciliation
At that meeting, what happened was that when we submitted our report, FAAN, which initiated the meeting, told the Senate Committee that they were not ready, that they needed two weeks. I think members of that Senate Committee are still alive you can verify. And they asked for two weeks. After two weeks we came back and when they were asked some questions they said they needed four weeks again. After one month we wrote to remind them that we are ready and since then we never heard anything from them. They didn’t show up but we kept on paying them and we have been reminding them that we need to reconcile this account, we like to pay for services rendered if they are genuine and if they are according to the law.
Sometime last year they brought the issue again, and the then Permanent secretary of the Ministry of Aviation, Binta Bello called us and called the Director General of the Nigerian Civil Aviation Authority (NCAA) and the Managing Director of FAAN and in that meeting the perm sec setup modus oparandi for reconciliation. We brought in consultant to be in-charge of it because previous ones that we had with PricewaterhouseCoopers who wanted to do reconciliation did not succeed because FAAN could not get their documents right. So this gentleman put up the procedure and that procedure has worked very well in NCAA, where we gave them all the payments that we have made, you will now recognize all the payments and then from there they will now bring their bills, then we will now look at the bills whether they are right or wrong and then from there we can now do the arithmetic.
The perm sec at that time said any bill that doesn’t have a backup document was null and avoid. You can’t charge us for landing if you don’t have the date we landed, the tale number of the aircraft that landed and any of our staff who will have signed that this flight took place. And of course too, the lady was very, very professional about it and laid out these criteria.
Court procedure so far
In October 2015, FAAN commenced suit against Arik Air before the Federal High Court Lagos division and the suit is pending. The suit number is FHC/CS /1558/2015. In that suit that was commenced by FAAN, FAAN was claiming that Arik Air is indebted to it. Together with the claim FAAN filed an application to arrest some aircraft of Arik. When the matter came up in court for them to move the application, they were unable to satisfy the court on why it should grant the application. On subsequent adjourned dates of the matter, particularly on the third of February 2016, FAAN informed the court that they were no longer minded to move their application on the grounds that they did not want to disrupt the operations of Arik Air.
Subsequently, FAAN filed another application in court because when they have filed their motion exparte we filed applications before the court in which we showed the court that contrary to the allegations they had made Arik had made payments in excess of N16 billion to FAAN and that the claim of FAAN was not supported by documents. Without prejudice to the matter which is pending in court I will not go into the merits of that. After we filed that application, FAAN now filed a motion in court by which they wanted the case referred to a special referee, which is like an audit firm.
By that motion FAAN recognized the fact which is that the amount it alleges that Arik is indebted to it is not certain. After they filed that application, we agreed to concede to that application on certain terms which is that the criteria that has earlier been set by the perm sec, which is that FAAN should provide documents supported with evidence and also that the firm that should do the audit be a reputable firm. We suggested PWC and others to give credibility to the process and it was supposed to be a fairly simply process by which if it was done and the firm is expected to report back to the court. The reconciliation report that is arrived at forms part of the records of the court and would be a basis for the court to make a decision one-way or the other.
AGF intervention
Rather than filing their application, FAAN subsequently wrote a letter through their lawyers that they have taken the matter to the Attorney General of the Federation and that he is was willing to mediate in the matter. They asked us to suggest a date for a meeting with the Attorney General of the Federation with a view to finding a resolution to the matter; we suggested the 18th of this month (April) because the matter was coming up on the 19th so that we would be able to report back to the court on the progress that has been made. The meeting on the 18th did not happen, the matter came up in court on the 19th of April, which is about three days ago and FAAN was represented in court.
Their chief legal officer was there and their lawyers were also there. And they informed the court that the parties were exploring amicable settlement of the matter; that was three days ago. So one begins to wonder where the actions that occurred yesterday (April 20) are arising from. It is elementary law that when a matter has been submitted to the court for determination, in this case the issue of whether Arik is indebted to FAAN or not had been submitted to the majestic powers of the court for determination. And this claim was not instituted by Arik, so it would not be the case that Arik was employing tactics to delay the proceedings. This is a claim that was initiated by FAAN. They came to court and asked the court to determine the issue for us. After submitting these issues to the court for determination, for FAAN, which is an agency of the federal government of Nigeria to resort to self help, whether by itself as an agency or by its staff, because its staff were involved in these actions.
It is an affront on the Federal High Court. And it is indeed an affront on the Nigerian state. Because has it has been said by the court since the decision of governor of Lagos and Ojukwu, where the rule of law prevailed as we believe it does in Nigeria, self help by force is outlawed. A situation where staff whether individually or as a union decide to turn themselves into debt collection agents for the federal government is absurd and never happens in any society in the world. We believe that the actions that occurred yesterday (April 20) are contemptuous, we believe that Arik reserves a right which it will decide to exercise to file the appropriate proceedings in court to protect the integrity of the court.
Resolving the case
If FAAN does not want the court to determine the matter let it come and tell the court so. But as long as FAAN has this claim pending before the court, it has to act within the rules of the law. And it is important to note the fact that, as would be seen by several letters, which we exhibited in our applications before the court, Arik Air has been the one constantly putting pressure on FAAN, lets us reconcile. If one looks at the document, which was delivered, the letter from FAAN, they wrote to the perm sec in the then Ministry of Aviation of September 4th 2015, where they communicated the steps for reconciliation of whatever outstanding debts.
What they communicated as the process for reconciliation: “ to reconcile Arik Air’s account in three phases and the cumulated debts span through FAAN, Maevis and IATA era; to reconcile Arik Air’s account by airport by airport basis, taking one airport at a time, to ascertain the debt position at each airport. To reconcile Arik Air’s account by matching invoices as well as payment receipts through FAAN’s ledger/statement. Where there is dispute FAAN shall provide necessary documents and if need be travel to the airport in contention with representative of Arik Air”.
This is a document from FAAN written to the perm sec at the time on the steps that they wanted to be followed towards the reconciliation. The issues are whether these steps have been followed till date. In compliance with those steps Arik Air by a letter of 19th November 2015 forwarded to FAAN soft and hard copies of evidence of payments and requested FAAN to revert with any queries or to provide its own documentation. From the 19th of November that the letter was sent to FAAN no response was received. On the 9th of December, 2015 Arik sent a reminder to FAAN and in fact the last paragraph of that letter stated that, “ we wish to state that we are at your disposal for further information or inquiries that you think can assist in speeding up this reconciliation process.
FAAN’s alleged nonchalance
This was also subsequently followed by another letter written by the MD, a reminder. So a situation where you are alleging that somebody owes you and the person is the one asking you let’s reconcile, it is an issue of numbers. If the flight landed here then bring the document and let us reconcile the process. Now you will se that at each point there is a move for reconciliation of the process, perhaps they feel they do not have adequate documentation to substantiate their claims, they resort to intimidation, hoping perhaps that when the flight operations are disrupted Arik will be arm twisted to making a payment whether the debt have been determined or not.
Arik Air continues to have confidence in the court even if FAAN does not have confidence in the court, Arik Air remains committed to adhering to the principles of the rule of law, Arik Air remains committed to awaiting the decision of the court. It is instructive to note that in this matter Arik Air has filed applications, including preliminary objections in the matter but immediately FAAN came up with their application for the court to appoint a special referee to reconcile the debt, Arik Air position is, in spite of our objections to this matter let the court appoint a special referee because Arik Air wants to know how much it actually owes or if it has even over paid FAAN. There are several other issues that have arisen, for instance payments that Arik Air has made to FAAN on issues like fuel surcharge and such other issues that are in contention; so in essence, from the legal perspective, our position remains that this matter is before the court. When a matter is subjudice the law is clear, parties should not take any steps that preempt or predetermine the anticipatory decision that the court would make. If the court finds tomorrow that Arik Air is indented to FAAN, Arik Air as a responsible organization, as a law abiding organization will comply with the decision of the court. If the court finds tomorrow that Arik is not indebted to FAAN Arik Air will also abide by the decision of the court.
Contesting the debt
Like the lawyer has said, while this was in court they kept talking to us, we shouldn’t talk to them but said we don’t want to delay the matter and that we want it behind us. They wrote us a letter signed by A.S Kolawole, GM, Credit Control, saying they recognize N11.4 billion, that they have seen that we had paid that is while this was in court. And then we now asked them that what happened to the balance of N6 billion? They said they had some money in their ledger, which they don’t know where it came from, the bank never said it came from Arik. We said okay, give us this list then we go back to the bank and the bank will tell us whether it came from Arik or somewhere else.
The bank didn’t give us that. Any time we want to get to the bottom of this issue they are being evasive. We are prepared, we want to pay for services rendered but we are not going to be intimidated and bullied into paying money. We are all Nigerians we want change and all of us have to assist President Buhari to institute the change in this country. It is not only in Aso Rock, it starts with every part of our lives. In everything we do we should resist people doing things arbitrarily. Like the lawyer has said, they took us o court and they said they should seize some of our planes. While that is going on they still came to meet us and wrote us a letter on February 3, 2016. We now said, okay how about the balance? Because I cant talk much in the matter, I would rather say that what happened yesterday (April 20) was very unfortunate and it is not good for Nigeria aviation, it is not good for Nigerian industries. It is unthinkable that a group of people will come and start disrupting operations of a company when a case is before a law court, even if it is not before a law court, staff now have relegated their management to the background and say that they are now in control of their organisation. And this is happening in an environment where we want to attract foreign investors. These investors will come and say oh these issue is not peculiar to Arik and FAAN, it happens all over the world. But there are civilized professional methods of resolving them.
You should know that the world is a global village, people know about what has happened and they are all calling to know what is happening. They want to know what is the government position, and our views and I tell them that I don’t know, I am sure at the opportune time the government will make its reaction known. Except that some people, some misguided people decided to act. I wouldn’t say whether it is FAAN or management of FAAN. We are desirous to put this thing behind us but some people don’t want the truth to see the light of day. If we owe them fine, we will pay them.
Damage of Arik aircraft in Calabar
But let me quickly remind you that we have some other issues with FAAN, we have not even brought that to the table, and that is the incident of Calabar where our aircraft was damaged. We wrote them, we gave the cost of repairs by Lufthansa, they have not responded. We know that there are other aircraft that have been damaged that were owned by foreign airlines that they paid but we the local one they have not paid our own. At the appropriate time, in an appropriate forum we will let that known. Despite paying FAAN passengers service charge, we are responsible for transporting our passengers from the terminals to the foot of the aircraft. We have charges for that and we have some other claims close to about N6billion. We are not mixing those ones with this one, we said lets do this reconciliation and know what it is then we will bring that in later.
Period of payments to FAAN by Arik
As at the end of last year, 31st December, we have paid over N17 billion and up to date this year we have paid N18.9 billion and then what we are dealing with in the reconciliation, FAAN’s letter here said: “ However we have attached FAAN’s position of your payments from inception of your operation up to 30th June 2015, which is in the sum of 11.4 billion naira.” So this 11.4 billion that FAAN has acknowledged it is for the period up to 30th June 2015.
Next step to resolving impasse
Part of what we have said here is that we will look at what next step we are going to take, and I think at this stage I must mention that we met with the Honourable Minister of State for Aviation yesterday (April 20) and we had a very good discussion and he promised to look into the matter. Like we also said this matter is also in court, so whatever we are discussing is without prejudice. We can also decide to take further action on that.
Arik’s endless issues with FAAN
That is what is very curious about this matter. FAAN has never said that any other airline in this world be it Nigerian airline or foreign airline owes it any money, not even one kobo. It has never happened before that they owe FAAN money. So the only debtor FAAN has is Arik Air. Would anybody in this room believe that? It has always been like that. At the time I saw the list of debtors with FAAN, one foreign airline topped that list, that was like four years ago but has FAAN ever said that one foreign airline owes anything? Is it possible that they always pay? Has FAAN ever said that any other person or airline in this country owes it anything? Has FAAN ever taken this action against any other airline? These are the questions that have remained unanswered. And I am glad that you raised that; you should please help us to find out.
Arik’s record of debts with FAAN
We are desirous to do things right, we are doing things right not just in flying safely, do our maintenance according to the regulations; you know we maintain our aircraft to EU standards not Nigeria. And we are flying to Accra, not just Accra-Lagos, from there we go to Banjul, Senegal, and they wrote us a commendation letter. Their billing system is simple and straight forward and of course we operate to JFK, London and Angola but why I called Accra is that we do about 25 flight out of Abuja everyday and we do similar number of flights out of Accra. And yet we don’t have the same problem. And as far as we are concerned, we are asking that things should be done and encourage people paying for services that they don’t render. And in Ghana, you will see the tail of the aircraft, you will the time we landed, when we departed, you will see us signing and everything is done. But the one from Nigeria here, even supply you didn’t do. So I am using Ghana because this is a sister country and we are doing about 42 flights a week from there. So why are we having this problem? They also said that we owe electricity N424 million from September 2015 till date, which electricity is that? Are they Kainji Dam? FAAN has to change; they have to do things properly. The system must be put in place so that you and I, your children and my children will benefit from it.
CULLED FROM THISDAY
